This month has seen a much-needed boost to many high streets as spending surged to pre-pandemic levels. This is thanks to the Covid-19 vaccination programme and the lifting of lockdown measures.
Centre for Cities’ High Street Recovery Tracker reported that spending in the UK’s large towns and smaller cities are recovering faster than in its largest urban centres.
Although the lifting of lockdown restrictions has provided a boost to high streets in more than half of the UK's large towns, cities are continuing to struggle.
Whatever your business model may be, business lending will be feeling the ripples of the pandemic for a while. That's why we have the 3 things to know about business lending post-COVID.
Adaptability & Recovery
Coronavirus impacted all businesses differently. The Coronavirus Business Interruption Loan Scheme (CBILS) helped just a few thousand firms, which created intense pressure for the Bounce Back Loan Scheme (BBLS).
After COVID-19, firms will work to re-establish their past trading levels, while burdened by new BBLS and CBILS debt.
However, many businesses have managed to thrive under coronavirus. From e-commerce to healthcare and manufacturing sectors. Many restaurants and pubs adapted to the delivery or take out model in order to comply with national restrictions.
Yet whilst some businesses have managed to grow as the economy bounces back, we can also expect demand for growth finance to soar.
2. Next Generation Lending
It's likely that a lot of the firms that have taken a BBLS loan may struggle to pay it back, and banks will need to tackle this situation with collections processes.
In order to fill this gap, a new kind of lender may present itself. New banks lending to UK business are likely to appear and can range from digital banks such as Starling Bank or something similar to traditional banking, like Allica Bank.
3. Plan for Open Banking
As businesses embrace and utilise technology, physical assets like premises and vehicles are needed much less.
This could become an increasing problem for finance providers as physical assets can be used as security against a loan. Without this security net in place, if a business can't repay its debts, it's crucial that lenders understand the performance of each business when granting loans.
Whilst a financial statement used to surface as enough proof, transparent data such as Open Banking allows business to view their bank account.
Cloud-based accounting was already an emerging technology before the pandemic, and with business loans in high demand, this is a clear way of providing the data you need to get a business loan.